Fourth in a Series: Amtrak’s Impossible Demands

Time is running out for daily operation of Amtrak’s long-distance trains. It could also be running out for the very concept that a train could provide reliable transportation between far-flung communities every day, with same-day connections to other trains, at least in this country. With various exceptions, this has been the basis of Amtrak’s long-distance train network for the first 49 years and five months of its corporate existence, as well as for nearly 140 years before Amtrak began operations in 1971.

Half of Amtrak’s service to Florida bit the dust two months ago and, at this writing, more than half of the remaining long-distance runs will cease to exist as of Oct. 1. At this point, only Congress has the power to prevent what many advocates and some managers fear will eventually lead to the demise of the few Amtrak long-distance trains still operating. I will have recommendations for Congress in future articles, but first I must look at the assertion by senior Amtrak managers that the impending cuts will be only temporary. As this article will show, it can be very difficult to believe that.

Passenger rail advocates oppose the cuts, almost universally. They are becoming more vocal, and they are not the only ones. Some members of Congress, both Democrats and Republicans in both houses, have spoken out, too. So have two former presidents of Amtrak. Paul H. Reistrup, who led Amtrak from 1975 to 1978, told me: “Keep it daily. I think it’s less expensive than fooling around with three times a week. Now, when you catch a train, you need a calendar instead of a watch.” David Gunn, who headed the railroad from 2002 to 2005, was quoted as saying. “If you want to preserve the network, you have to keep it running to attract passengers back.”

Many other Amtrak managers, along with the advocacy community and much of the general public, know that, too. Amtrak lost far more money than it saved by implementing the infamous Mercer Management service cuts a quarter-century ago, as I documented in Part 2 of this series: “Cutting Service Actually Costs More.” Yet the proposed cuts will be far more severe than any ever implemented by Amtrak or its predecessors. Previous reductions, even the Mercer cuts, were limited to specific trains. This time, not a single train will be spared except the Auto Train, which only customers with automobiles can ride.

Amtrak’s claim that the impending cuts will be only temporary flies in the face of reality. Ridership on the long-distance (L-D) trains has been out-performing corridor trains lately, which should provide an incentive for Amtrak to keep them running. If Amtrak were suffering from a sufficiently acute financial bind, perhaps the public would give management the benefit of the doubt, but only if Amtrak officials would pledge to restore daily operation as soon as possible. Not only did they fail to do that, but they also set conditions for restoring daily operation on a train-by-train basis, conditions that appear impossible on their face. Amtrak President William J. Flynn’s May 24 letter to Congress contained a demand for money, along with a threat to punish Amtrak’s riders by killing their trains if Congress did not pay off. Without waiting for a reply, Amtrak proceeded to cut Florida service in half on July 6. If this were a crime story, the first two hostages “got it” that day.

Flynn may actually believe that he intends to restore the L-D network to daily operation. In a Rail Group On Air podcast interview with Railway Age Editor-in-Chief William C. Vantuono, he said that, especially for younger people, “convenience, connectivity and flexibility are key attributes of a high-quality experience” (at 5:00) before touting “shorter-distance corridors” (at 7:15). He said he hoped “we can modernize long-distance service” (at 7:45), whatever that means. Despite praising Amtrak employees and the trains themselves, in theory, he never mentioned restoring daily service. He said, “We are committed to the future of the long-distance network” (at 10:40; emphasis in original), but added that “ridership was so low that it does not make sense to run seven-day service” (at 11:16), and that it was “exceedingly small” (at 11:28). He suggested running “many more frequencies” of shorter-distance trains, in addition to the current L-D network (at 11:50). While it is highly unlikely that any Amtrak rider would object to adding more service, the “in addition” assertion in Flynn’s statement appears highly questionable.

Flynn also claimed “As ridership returns, we intend to restore service” (at 11:04), but Amtrak’s conditions, contained in a white paper, do not comport with that claim. Despite his optimistic-sounding statements, Flynn had already threatened to slash frequencies, without presenting a reasonable plan for bringing the trains back to daily service, or even promising that such operation would ever return. In the document, Amtrak set a series of conditions for each train at issue to be restored to daily operation. Vantuono reported those conditions here on Aug. 13: “Amtrak Announces Long-Distance Plans.” There was no date on the document, but a reliable source said it was issued on Aug. 11:

Download The Full White Paper:

The Amtrak document began by saying: “To be clear, our temporary reductions and subsequent plan to restore this service are dependent on sufficient federal assistance (at least $3.5 billion in FY21 assuming a 50% system-wide ridership level, but additional assistance could be required if ridership does not reach this level)…” Congress may come up with money; time will tell. Still, the conditions that Amtrak has chosen to impose appear to negate the assertion that the cuts will be “temporary.”

Let’s look at those three conditions, one at a time:

“1. Public Health — Is the COVID-19 pandemic under control? Amtrak will assess COVID-19-related hospitalization rates in the regions through which a given L-D route operates. If those rates are stable or declining as of February 15, 2021, this condition will be met.”

Amtrak is conditioning the return of daily service on any and all trains on the fortuity of behavior of the COVID-19 virus. While everybody hopes that an effective vaccine will be developed and show results soon, that has nothing to do with whether or not Amtrak should provide reliable transportation. Except for Florida service, the trains that ran daily last year are still running every day. Like local transit in many of our cities, persons who must travel have a means of transportation. New Jersey Transit has returned to full weekday service, using CARES Act money to do so. Amtrak carries riders who need to travel, too, including the oil workers who take the Empire Builder to and from Williston, N.Dak. Amtrak has also received CARES Act funds. Cutting some service on corridor routes still allows potential riders to travel any day they wish. Cutting service only to certain days of the week does not.

“2. Future Demand — Are customers booking trips near the same rate as in 2020? Amtrak will compare advance bookings for June 2021 (as of February 15, 2021) to advance bookings for June 2020 (as of February 15, 2020). If the percentage of available seat- and room-miles booked in 2021 is at least 90% of the 2020 percentage, this condition will be met. (Note that calculations of availability for 2021 will reflect any caps on ticket sales to promote social distancing, as well as any other relevant measures adopted to minimize COVID-related risks.)”

This condition is effectively impossible. It requires that, by Feb. 15, 2021, advance bookings must total 90% of the bookings that Amtrak had on Feb. 15, 2020, before the coronavirus hit this country. First, that requirement assumes that demand for space on the trains will approach the pre-COVID level. Travel generally will not reach such high levels until most people feel safe traveling, and until there is enough activity to give people reasons to take business or pleasure trips. To date, we know of nobody in the health field who has predicted that the crisis will be over by then. A second wave of the virus will exacerbate the situation that existed during the most-severe lockdowns last spring, if it happens. Even if an area is spared such a catastrophe, that is no guarantee that schools, businesses, leisure and entertainment venues and other places will be open by February.

Second, because of the uncertainty that everybody is feeling today, much of the public is reluctant to travel. Whatever might happen concerning the effects of the virus, it has become more difficult to plan ahead than it has been for a long time, perhaps within living memory. Amtrak requires that many of its former riders commit to a summer trip at least three or four months in advance. Amtrak has not promised that they will be allowed to ride on the day of their choice, so restoring daily service on a train will not help the customers whose early reservations (before Feb. 15) would trigger the return of the train on the other four days of the week. Riders on the other four days would only be able to reserve their seats or rooms on short notice. If the numbers fall short, Amtrak will have an excuse to cut the service again next year. Without Amtrak’s promise of reliable daily service, it cannot exist again.

Third, there will not be enough seats or sleeping-car rooms to accommodate 90% of pre-COVID ridership. If a train has 200 coach seats available (about four coaches’ worth), that yields a weekly inventory of 1,400 seats in each direction. With the impending service reductions, that inventory would be reduced to only 600 seats. Amtrak is effectively asking riders to reserve seats or sleeping car rooms approaching last year’s level, even though they would no longer have an available departure on the majority of days. Some riders planning to connect to another lL-D train would have a same-day connection available only once or twice each week.

Amtrak also uses a yield-management system to set fares. As fewer seats or rooms are available, the fares go up. If the riding public were willing to book trips that could satisfy Amtrak’s conditions, they would be paying more to ride on a tri-weekly train than on a comparable train that runs every day. It does not appear that many motorists or airline passengers (however many of them may be left when the dust settles) would submit to Amtrak’s choice of travel days, when they will still be able to use another mode any day they wish. As we noted in Article 2 of this series, during the less severe (but still infamous) Mercer cuts of the mid-1990s, some did. Many more did not, so ridership and revenue both plummeted. Non-motorists will not have as much of a choice, but the majority of potential customers would be able to find another way to go.

To make matters worse, prospective travelers cannot access schedules, either in print or on Amtrak’s website. The only way to do it is to start booking a room or seat. That effort yields point-to-point times for specific trains, but no other information, especially about other stops. 

Longtime advocate and Amtrak retiree Philip Streby described the old booklet-format schedules that Amtrak used to print as a “wish book” that enabled anybody to see where Amtrak goes, which might inspire the person who read it to take a trip. Now, that information is not readily available anywhere. It is difficult to fathom how Amtrak could expect riders to book trips in advance for next year at 90% of pre-COVID-19 numbers, when it is not easy to find a train’s schedule, or even the days on which it operates, or the same information for any connecting trains.

“3. Current Performance — Is ridership close to our projections in our operating plan? Amtrak will compare system-wide ridership levels for the fall (Q1 of FY 2021) with our FY 2021 operating plan, which already accounts for reduced ridership due to COVID. If the number of passengers is at least 90% of the projected figure, this condition will be met.”

This one looks like the real killer. Amtrak’s baseline ridership measure will be the number of customers who are willing to ride during October, November and December of this year (the cuts are scheduled to begin Oct. 1, the beginning of its FY2021). This will be the quarter when service has just been slashed. Some people who had reserved travel before last May will be treated to the news that the train they want to ride will not run that day, and/or they will not have a same-day connection at Chicago or another transfer point. Those who lose the “connection lottery” will have to wait an extra 48 hours (2/3 probability) or 72 hours (1/3 probability). So how many riders will stick it out and make the trip? Some will, but probably not too many. Compared to the number of available seats booked for FY20 (now ending), Amtrak demands that the number of available seats booked for FY2021 (beginning soon) must exceed 90%. So, essentially, Amtrak is daring its customers to ride only on the three days per week permitted at nearly the level they rode when they, not Amtrak, chose their day of travel.

Amtrak’s white paper goes on: “If all three conditions are met for a given Long Distance route, then in February 2021, we will begin working to restore service along that route. Depending on the particular route, that restoration could be complete as early as late May, and no later than June 30, 2021. If any route is not yet ready to be restored when we conduct our review, we will apply an updated version of the criteria described above as part of the FY 2022 planning cycle (or sooner, in the event of dramatic improvement in demand prior to that point).”

It appears that Amtrak is doing what it can to prevent such “dramatic improvement.”

So every train will be relegated to running only three times a week for nine months. If a train flunks the tests, it will not return to daily operation for at least another year, barring the level of “dramatic improvement” that appears impossible in a shrinking economy, and with riders becoming resigned to having more days when they can’t take a trip than when they can.

To make matters worse, the host freight railroads will not easily return to Amtrak the additional operating slots they will gain when daily trains go to thrice-weekly. Today’s two tri-weekly trains have operated on their current schedules for decades. The Cardinal has not run every day since 1981, and the Sunset Limited has not since 1970. Efforts during the past decade to restore the latter to daily service ran into demands for compensation from Union Pacific that Amtrak could never afford. Even if CSX were to allow the former to run daily, the Buckingham Branch Railroad (which has a long-term lease with CSX to operate the of the line in western Virginia) almost certainly would not.

Amtrak reversed most of the Mercer cuts in 1997, returning most of its L-D trains to daily operation. The experiment ended up exacerbating the financial losses, rather than mitigating them. This time, Amtrak appears to be ready to spend money in order to cut service. Amtrak gave this answer to the question “Could reducing frequencies save less than anticipated?”: “We think the estimated savings are reasonable. Because ridership and revenues on Long Distance trains have fallen dramatically during COVID-19, these trains are covering only a small portion of the variable costs, such as the labor costs for conductors, engineers and on-board service employees, fuel and host railroad payments, that are incurred for the operation of each train frequency we operate. Even with the very cautious assumptions we have made about how less frequent service will impact ridership as we have developed our plans, we project significant net savings from reducing Long Distance service until ridership demand and revenues approach more normal levels.”

So Amtrak claims that it will save on variable costs by cutting service, but makes no mention of the fixed costs, which remain the same, no matter how few or how many trains Amtrak runs. That means the amount of fixed costs attributed to every remaining rider on the entire network will increase by a factor of 2.33 (a factor of about 2 for Florida trains). Amtrak plans to continue making capital improvements to specific routes, stations, fleets and safety. These increases in fixed costs could easily outweigh any savings in variable cost that could result from the cuts. Is Amtrak really saving more in variable costs than it will lose in revenue because there will be few riders? As we noted in Part 2 of this series, the Mercer cuts cost more, and they were not as severe as the ones Amtrak is now planning.

Also in the “FAQs” section of the white paper, Amtrak claimed: “Due to an 81% reduction in Long Distance demand in April and May combined, we will temporarily reduce service along most of our Long Distance routes to three frequencies per week, effective October 1.” Even if ridership had dropped by that amount last spring, it has rebounded significantly, according to a statement made by Jim Mathews, President and CEO of the Rail Passengers’ Association, an advocacy group, to the House Transportation and Infrastructure Subcommittee on Railroads, Pipelines and Hazardous Materials on Sept. 9. Mathews said that ridership numbers on the L-D trains have outperformed those on the Northeast Corridor (NEC) and state-supported corridor trains since the spring: “Amtrak’s own ridership numbers back this up. Since the crisis began through the end of July, NEC revenues are down 90% from the same period last year, compared with a 64% decline for the National Network. Ridership has also flatlined across the NEC, down 88%. By contrast, ridership on the long-distance routes is down only 68%t during the COVID Period.” He also presented a graph that showed ridership through the year on all three of Amtrak’s business lines.

Other advocates have made similar observations. If they and Mathews are correct, then Amtrak is knowingly subjecting its most loyal customers to severe service cuts. It also appears highly unlikely, if not impossible, that those reductions will ever be reversed. I argued in Part 3 of this series that Amtrak’s decision is ideological, and not about money. Neither Flynn’s statements nor Amtrak’s white paper successfully traverse that argument. If you want something, you pay for it. It seems that Amtrak wants to cut the long-distance trains so fervently that it is willing to pay for the privilege.

It is now up to Congress to do something about Amtrak’s actions. It has not done anything at this writing, is holding hearings, and individual members are complaining. Will Congress act while it still can? I will look at what Congress can do, starting with the next article in this series.

David Peter Alan is Chair of the Lackawanna Coalition, an independent non-profit organization that advocates for better service on the Morris & Essex (M&E) and Montclair-Boonton rail lines operated by New Jersey Transit, and on connecting transportation. In New Jersey, Alan is a long-time member and/or board member of the NJ Transit Senior Citizens and Disabled Residents Transportation Advisory Committee and Essex County Transportation Advisory Board. Nationally, he belongs to the Rail Users’ Network (RUN). Admitted to the New Jersey and New York Bars in 1981, he is a member of the U.S. Supreme Court Bar and a Registered Patent Attorney specializing in intellectual property and business law. Alan holds a B.S. in Biology from Massachusetts Institute of Technology (1970); an M.S. in Management Science (M.B.A.) from M.I.T. Sloan School of Management (1971); an M.Phil. from Columbia University (1976); and a J.D. from Rutgers Law School (1981). The opinions expressed here are his own.